No Easy Cure for VA’s Ailing Bureaucracy

When President Obama announced new leadership at the Veterans Affairs Department on Friday, he sketched his view of the nature of needed reforms: “Part of that is going to be technology. Part of that is management,” Obama said, noting the need for a “change in culture” so that “bad news gets surfaced quickly.”

The problem with that view is that Congress and previous presidential administrations repeatedly have given VA special authorities aimed at reforming the department’s decentralized bureaucracy and improving the way it buys and implements technology.

It is exempt, for example, from sequestration, and its chief information officer has greater budget authority than any of his counterparts. Where other departments have seen their budgets slashed, VA’s has grown and appears headed for more growth. In March President Obama proposed a $163.9 billion budget for fiscal 2015, a 6.5 percent increase over this year’s funding.

Yet those factors did not prevent the patient-wait-times scandal.

Certainly some of the department’s problems are beyond its control. The influx of 1.4 million new patients since 2009 -- mostly veterans returning from Iraq and Afghanistan -- converged with a shortage of VA primary care physicians. A fundamental problem is that there are now 400 vacancies and a per doctor workload of 2,000 patients, rather than the 1,200 per year recommended, according to J. David Cox Sr., national president of the American Federation of Government Employees.

But there are also serious management problems, starting with a habit of automatic employee bonuses, the Wall Street Journal editorial page declared, citing a 2011 Government Accountability Office finding that 80 percent of VA’s medical care providers together received $150 million in performance pay despite “no clear link between performance pay and providers’ performance.”

In interviews with Government Executive, two former top VA executives and a longtime observer shared their views on what ails the agency and laid out some suggestions on how the department’s fresh-eyed leaders should manage.

A Sprawling Bureaucracy

VA’s challenges stem from its “enormous size and scale, combined with the granularity of the health care industry,” said W. Scott Gould, a former deputy Veterans Affairs secretary now in private health care.

“Health care is by definition an enormously specific, patient-oriented, detailed business process,” he said. “The agency itself was designed to be sealed against political influence,” he added, noting its 9,000 to 1 ratio of career to political appointees, compared with a 2,000 to 1 ratio at the Defense Department and a 500 to 1 ratio at most agencies.

“There was good reason for this insularity, rooted in the belief at the time that the health industry was stable and that doctors knew best how to run a health care system,” Gould said. “But we learned in the intervening decades that health care is rapidly changing, with new influences from Web technology to evolving pharmaceuticals and health care practices,” changes that require leadership and management. 

In a system “designed to be resistant to change and to political influence,” Gould expressed frustration at some of the long-term vacancies in top-level VA positions due to delays in White House vetting and congressional scrutiny. “It puts an enormous demand on the folks who are in there,” Gould said. 

A thicket of red tape governs managers’ ability to hire, fire, recruit, train and punish employees while federal acquisition regulations prohibit discussions with private sector experts, which contributes to VA’s technology woes.

Finally, Gould said, there is a lack of consensus on how best to serve veterans. Some believe a dedicated system exclusively for vets is essential, while others would prefer to send them out to the private sector for treatment. “My sense is there’s a middle ground, but the stresses it puts on the organization on are significant,” he said.

Demographic Challenges

W. Todd Grams, VA’s former chief financial officer now a director at Deloitte & Touche LLP, sees new pressures from the aging population of older veterans and a new generation of those returning from Iraq and Afghanistan who are much more apt to use VA benefits.

Also challenging is managing the sheer size and diversity of VA benefits and programs. “It’s not like 280,000 employees are all doing one core function,” noted Grams, who spent a total of 11 years at VA. Health care is a complicated enough business. Add to that compensation for the wounded and their widows and orphans, pensions for the low-income veterans, education benefits, life insurance and the national cemetery system.

The department’s size also complicates information technology undertakings, Grams said. Even “private-sector companies don’t have a great track record on very complex, large implementations, and they don’t have the same functionality and sheer numbers of VA’s systems,” he said.

On management, “As with any department, there’s a delicate balance constantly being worked in running a large organization of whether to be centralized or decentralized,” he said. A popular VA saying warns against “trying to manage the field offices with a 3,000-foot-long screwdriver.”

Max Stier, president and CEO of the nonprofit Partnership for Public Service, said that like the recent scandals at the General Services Administration and the Internal Revenue Service, VA’s issues are “symptoms of a broader set of problems stemming from not adequately addressing the long-term management of government.”

Stier cited VA employees’ answer to a question on the annual Employee Viewpoint Survey on whether employees feel able to flag violations of law without fear of reprisal. “Only 59 percent at VA said ‘yes,’ which is not much higher than in the rest of the government, which tells us things are not well,” he said. He added that he believes VA should incorporate employee attitude data from annual surveys into the performance evaluations of their supervisors, as former Transportation Secretary Ray LaHood has done.

The fact that VA provides benefits directly to the public “means it’s a little clearer when things are not working because the public feels it directly,” in contrast to, say, the Defense and Homeland Security departments, Stier said.

Grams warned of unintended consequences as VA takes on the current issue of quick access to medical care for veterans on waiting lists. “If they deal with it quickly, they have to be keenly aware of some of the risks they may be creating by a quick fix and turn-around, so that they don’t solve problem A, but then the inspector general comes back in 18 months and says you’ve now created problems B, C and D.”

(Image via Mark Van Scyoc/Shutterstock.com)